Why in the news?

• The IRDAI has permitted insurers and reinsurers to invest in select bonds of AIFIs.

All India Financial Institutions (AIFIs)

• What are they?: All India Financial Institutions (AIFIs) are specialized development finance bodies in India that provide long-term funding and support to priority sectors like agriculture, industry, housing, exports, and infrastructure, complementing commercial banks.
• Regulation: Regulated primarily by the Reserve Bank of India (RBI)
• Features:
  • AIFIs mobilize resources through bonds and government support to bridge funding gaps in high-risk, long-gestation projects.
  • They operate nationwide without accepting public deposits, focusing on developmental lending rather than profit.
  • Functions: AIFIs offer direct lending, refinancing to banks/NBFCs, project appraisal, and non-financial services like technical assistance.
  • Unlike banks, they prioritize sectoral development over short-term deposits.
• Major AIFIs in India:
  • NABARD (National Bank for Agriculture and Rural Development): Established in 1982, it refinances rural credit, promotes agriculture, and supports SHGs and microfinance.​
  • NHB (National Housing Bank): Focuses on housing finance, refinancing housing finance companies and promoting affordable housing.​
  • SIDBI (Small Industries Development Bank of India): Aids MSMEs with credit, technology upgrades, and venture capital.​
  • EXIM Bank (Export-Import Bank of India): Provides finance for exports, imports, and overseas projects to boost trade.​
  • NaBFID (National Bank for Financing Infrastructure and Development): Newer AIFI (recognized 2022) for long-term infrastructure debt financing.

Source: The Hindu